Management’s Discussion and Analysis
capital investment over the last number of years.
Risk management capital projects concentrate on mitigating the likelihood of a negative consequence occurring on the SaskEnergy system, such as damage or loss of gas containment. These consequences typically include damage to infrastructure, environment and potential harm to or loss of human life. Risk management spending of $17 million is in line with the year-to-date spend in 2025. Reliability of Natural Gas Service SaskEnergy’s network of transmission and distribution infrastructure requires regular monitoring and inspection, maintenance, upgrading and replacement to maintain service reliability for customers, avoid public safety incidents, and meet growing regulatory requirements. Recent years have also seen an increase in the cyber threat landscape and as a critical infrastructure operator, the Corporation has developed a robust Enterprise Security program that addresses both cyber and physical risks. This program requires continual improvement to mitigate risks and ensure secure systems for reliable operations. Reliability of natural gas in service includes enhancements, modifications or upgrades to facilities, ensuring that natural gas demand will be met without failure or loss of service. Reliability of natural gas service spending decreased by $4 million in 2026 year-to-date. Business and Technology Optimization Business and technology optimization ensures that every investment in information technology, every resource allocated and every application in development or in production, meets the Corporation’s business goals. The 2026 year-to-date investment in business and technology optimization of $1 million is lower than 2025. SaskEnergy has adopted more cloud computing services and Software as a Service (SaaS) arrangement to meet its software and technology infrastructure needs. In doing so, spending on these systems has shifted increasingly from capital investment to operating expenses. Outlook Safe, reliable, and affordable energy remain crucial for the prosperity of Saskatchewan’s people, businesses, and industries. Maintaining affordability while earning a return aligned to long-term expectations for a natural gas utility, is an increasing challenge given the growing cost pressures of recent years. The 2026-27 financial budget includes cost control measures, such as maintaining a consistent level of operating expenses and executing on a lower operational sustainment capital program, to begin addressing this challenge. SaskEnergy's distribution utility serves more than 414,000 customers and is expected to continue growing at a modest rate of less than 1 per cent annually, resulting in limited revenue growth. At the same time, operating costs continue to rise due to inflation, ongoing investment in system reliability, technology modernization, and cybersecurity. While efficiency initiatives and steady customer growth have helped maintain affordable rates, earnings have declined below long-term targets. To support the financial sustainability of the distribution system while balancing customer affordability, SaskEnergy is relying on continued cost management and a regulatory revenue framework that supports the achievement of target returns by 2030- 31. Revenues from transmission and storage have risen steadily in recent years from both modest demand growth as well as timely rate adjustments needed to account for increasing operating costs, primarily from rising third-party transportation costs. As a result, returns for the Corporation’s transmission and storage utility have been closely aligned with its long-term return target of 8.57 per cent.
11
Made with FlippingBook Ebook Creator